Risk and Resilience in a Fragmenting Global Order

Written by Elisa Garbil – 24.11.2025

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The era of seamless globalisation has entered a period of structural stress. What once appeared to be an inexorable process of economic integration is now fracturing into competing regional blocs and politicised supply chains. The assumption that trade would naturally expand, that borders would soften, and that efficiency would prevail over ideology no longer holds. The forces of national security, industrial self-reliance, and political identity have reasserted themselves with intensity.

The current U.S. administration, propelled by Donald Trump’s return to power, has accelerated this transformation. It has recast economic diplomacy as a tool of strategic dominance rather than mutual growth. The organising idea of a rules-based international order, which was the framework that sustained global business for decades, is being replaced by a more confrontational model. One defined by tariffs, sanctions, and the calculated use of uncertainty as leverage.

Across business and policy circles, this shift is not viewed as temporary. It reflects deeper structural changes such as the reshaping of production networks, the decline of institutional trust, and the embedding of risk into the daily operating logic of global firms. For executives and investors alike, the challenge is no longer simply managing cyclical volatility: it is navigating a world in which politics defines the boundaries of commerce. Listen to John Sitilides here!

Tariffs as Instruments of Power

Duties on steel, aluminium, and electronics form part of a broader plan to secure industrial independence and reshape global manufacturing. Such measures aim to compel production to move closer to American soil or into the territories of strategic allies.

For global markets, the consequences are immediate and disruptive. Tariff escalation reduces predictability in pricing, fragments production systems, and raises costs throughout the value chain. In effect, tariffs have become the new frontier of risk, one that is fluid, politically motivated, and often deployed with little warning. Companies once guided by data-driven forecasts now face an environment dominated by political contingency.

This uncertainty carries a cost that goes beyond trade volumes. It undermines the assumption of reliability upon which investment decisions are made. The global economy, which once thrived on stable expectations, must now adapt to episodic policy shocks delivered through social media, campaign rallies, and unpredictable executive decisions.

The Political Supervision of Supply Chains

This reconfiguration is evident across sectors from semiconductors to pharmaceuticals. Businesses are re-evaluating where and how they manufacture, not merely for economic reasons but to ensure compliance with shifting political boundaries. The resulting duplication of facilities, inventories, and sourcing options has raised operating costs while limiting flexibility.

Boards that once optimised for global reach now optimise for political acceptability. In many industries, a single misjudged partnership can trigger sanctions, exclusion from public contracts, or reputational backlash. The process of localisation, both encouraged by government incentives and industrial policy, is also a process of fragmentation. Global commerce is being refitted into a series of parallel systems whose interconnections are no longer assumed but negotiated.

For many firms, the central strategic question has changed. It is no longer about cost advantage or market expansion, but about jurisdictional loyalty. They need to determine which political system, regulatory framework, and currency zone they can safely inhabit. The implicit neutrality of business has eroded.

Technology and the Great Decoupling

Technology lies at the core of the new geopolitical contest. What was once a shared space of innovation has divided into two partially isolated ecosystems, one centred on the United States and its allies, the other led by China. Each side seeks autonomy in the design, production, and governance of digital infrastructure.

This ‘technological decoupling’, as you could call it, encompasses semiconductors, artificial intelligence, quantum computing, and telecommunications. Export controls, investment restrictions, and data sovereignty rules have created an environment in which firms must choose technological loyalties. The global innovation network that defined the early twenty-first century is splintering into regional blocs that compete on incompatible standards and parallel supply systems.

The implications are more than profound. Duplication of research, limits on collaboration, and regulatory divergence raise costs and slow the pace of scientific advancement. Companies at the centre of this technological divide, such as chipmakers, software firms, and data service providers, face intense scrutiny. Every partnership becomes a potential security concern. Every line of code, every component, may be viewed through the lens of strategic dependence.

This division does not eliminate interdependence but politicises it. The outcome is a form of selective integration, where technology flows only within trusted networks. For firms accustomed to global scale, this signals the end of universality and the rise of conditional connectivity.

Energy, Sanctions, and the Weaponisation of Interdependence

Energy markets illustrate how economic interdependence has become a source of strategic leverage. The renewed sanctions on Russian oil and gas exports exemplify how trade, finance, and diplomacy have merged into a single instrument of coercion. By limiting access to Western markets and financial systems, these measures aim to degrade adversaries’ capacity for influence and conflict financing.

The immediate effect, however, is one of global dislocation. Energy prices surge, supply routes shift, and financial flows are disrupted. Traders, insurers, and refiners face compliance uncertainty and elevated transaction risk as the use of sanctions as a geopolitical weapon turns participation in the global economy into a liability for many actors.

At the same time, these measures accelerate the construction of alternative systems. Non-Western states increasingly explore non-dollar payment mechanisms and regional clearing platforms. The dollar-based financial order, once seen as unassailable, faces gradual diversification. This evolution reduces transparency, complicates monetary coordination, and expands systemic risk.

The broader consequence is the normalisation of coercive economics. Trade, finance, and energy policy are no longer instruments of mutual gain but of selective pressure. Firms caught in the crossfire between jurisdictions may find themselves forced to choose between markets, partners, and currencies. The once-neutral terrain of commerce has become the front line of geopolitical rivalry.

Trade, Security, and the Convergence of Agendas

The boundaries between economic and security policy have blurred almost entirely as diplomatic missions now integrate trade strategy with military alignment, and commercial partnerships are assessed for their contribution to national defence objectives. The United States has made economic leverage a core element of its strategic outreach in Asia, linking market access to security cooperation.

This convergence reshapes how states and companies interact. Agreements once limited to tariffs and quotas now include defence-industrial clauses. Supply contracts in infrastructure, telecommunications, and logistics are evaluated not only for profitability but for their alignment with geopolitical objectives. In effect, economic activity is treated as a form of strategic positioning.

For business, this means risk exposure has expanded beyond traditional financial metrics. A factory, a data centre, or a shipping route may carry political implications far beyond its balance-sheet value. Firms that occupy sensitive sectors, think of aerospace, energy, or critical minerals, are expected to demonstrate alignment with the political priorities of their host governments.

The shift creates a new class of operational risk where being on the wrong side of an alliance is a real threat. Companies must now treat diplomatic developments as strategic variables, as what was once external context has become an internal determinant of corporate survival.

Europe’s Strategic Crossroads

The continent’s aspiration for strategic independence thus collides with its interdependence. Rebuilding domestic production capacity in semiconductors, batteries, and defence manufacturing demands public subsidies and higher consumer prices. At the same time, maintaining access to global markets requires political moderation and complex diplomacy.

European firms must navigate three systems at once: (1) the regulatory rigor of the European Union, (2) the strategic alignment of the U.S.-led alliance, and (3) the commercial attraction of Asian markets. The costs of compliance and adaptation multiply. For corporate leaders, the challenge is to sustain competitiveness while meeting conflicting expectations.

In addition, the European predicament mirrors the global one: an age of overlapping systems in which autonomy is costly and neutrality fragile. The concept of a single, integrated market is yielding to a mosaic of managed interconnections. Europe’s economic resilience will depend on how effectively it can operate within this fragmented order without being defined by it.

The Corporate Landscape of Fragmentation

For multinational corporations, the new geopolitical environment transforms every aspect of strategic planning. Supply-chain design, capital allocation, and even human-resource policy are now shaped by political risk. Boards must account not only for currency fluctuations and regulatory compliance but for alliance politics, sanctions exposure, and reputational vulnerability.

Risk management functions once focused on financial volatility must now integrate geopolitical intelligence. Scenario analysis increasingly includes variables such as trade war escalation, technology embargoes, and resource nationalisation. The boardroom vocabulary of the next decade will include terms once confined to ministries of foreign affairs, think of terms like ‘deterrence’, ‘containment’, and ‘strategic alignment’.

In parallel, the social dimension of corporate risk has intensified. Public opinion, digital activism, and government pressure interact to constrain business decisions. Firms that operate across jurisdictions face conflicting political and ethical expectations. Environmental and social goals, once global in scope, are now refracted through national interests. Resilience, therefore, is not only operational but conceptual. It requires the ability to adapt to a world in which the map of globalisation has been redrawn, one where diversification remains vital, but diversification itself must be politically sustainable.

The Future of Globalisation

North America, Europe, and East Asia will continue to trade, but under rules shaped by their own strategic imperatives. Developing economies will face renewed pressures to align politically in order to access technology, finance, or security guarantees.

For investors, the long-term risk is institutional fragmentation: the erosion of shared standards that once underpinned predictability. For policymakers, it is the return of zero-sum logic to international economics. And for businesses, it is the challenge of maintaining efficiency in a system designed to privilege sovereignty over scale.

The tension between openness and control will define the decade ahead. Companies that thrive will be those capable of translating geopolitical awareness into corporate strategy, embedding adaptability at every level of their operations.

Living with Permanent Uncertainty

The global order now functions less as a marketplace and more as a landscape of negotiation. Economic success depends on strategic navigation as much as on innovation or efficiency. The forces that once sustained stability, like trust, institutions, and shared norms, have weakened, leaving a system governed by power, perception, and risk. Businesses cannot avoid this reality. They must learn to operate within it and ensure that they have the capacity to interpret political signals, anticipate regulatory swings, and realign supply networks. These have all become as critical as financial management or technological expertise.

The world is not deglobalising in the literal sense, it is reorganising under new constraints. The flow of goods, capital, and information continues, but through channels conditioned by national interests. The challenge is not to reverse this trend but to understand it. There is a need to recognise that the age of effortless globalisation has given way to an age of strategic exposure. In this transformed environment, risk is no longer an external shock but the texture of the system itself. Those who adapt to it will not eliminate uncertainty, but they may learn to use it as a competitive advantage.